US energy exports to Poland

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November 14, 2020

US energy exports to Poland

President Donald Trump pitched U.S. energy exports to Europe as an alternative to supplies from Russia.

Trump attended a meeting of the Three Seas Initiative, an effort by 12 Central and Eastern European nations to increase trade, infrastructure and energy ties in Warsaw, Poland.

Trump said “The United States will never use energy to coerce your nations, and we cannot allow others to do so.”

The comments Trump made weren’t directly to Russia, but his message was clear to the assembled leaders.

Russia cut gas supplies to Europe in 2008 during a dispute with Ukraine. Russia’s military intervention in Ukraine and annexation of Crimea in 2014 again raised concerns about Europe’s reliance on Russian gas.

The Three Seas nations are highly dependent on Russia for natural gas. The initiative’s goal of building out north-south energy infrastructure aligns with the European Union’s effort in recent years to better integrate its gas pipelines to guard against supply shocks, particularly from Russia.

“We are committed to securing your access to alternate sources of energy, so Poland and its neighbours are never again held hostage to a single supplier of energy,” Trump said.

The United States administration hopes to ship more liquefied natural gas, or LNG, to the region. The United States has abundant supplies of low-cost natural gas and is building new terminals to ship the fossil fuel overseas in liquid form.

Poland received from Cheniere Energy’s Sabine Pass terminal its first shipment of U.S. LNG in June this year.

LNG trade between the United States and Three Seas nations to reduce the U.S. trade deficit and stands to improve energy security among the European countries.

U.S. LNG significantly displaces Russian natural gas shipped by pipeline are slim. Piped gas sells at a large discount to LNG, which must be cooled to liquid form, shipped overseas and turned back into its gaseous form.

Russia has the ability to cut prices and adjust contract terms to maintain its dominant position in the European gas market.

For the time being, those shipments could be limited due to the lack of capacity in the region.

There are also only two LNG import terminals within the Three Seas bloc: in Poland and Lithuania though Estonia, Croatia, Latvia and Romania also have plans to open LNG terminals. Pipeline connections to Western Europe, which has more LNG terminals, are also limited.